FedEx's Smith outlines ambitious profit goals

Wednesday, October 10, 2012

FedEx Corp. announced Tuesday evening programs that it expects will improve annual profits by $1.7 billion during the next three years, with a significant portion of the benefits achieved by fiscal 2015.
The company had net income of $2 billion, and operating income of $3.2 billion on revenue of $42.7 billion in its fiscal year which ended May 1.
FedEx also announced that David F. Rebholz, president and chief executive officer of FedEx Ground, will retire effective May 31, 2013.
In a keynote speech to investors and lenders, Frederick W. Smith, FedEx chairman, president and chief executive officer, also said the company intended to increase its dividends in years to come.

Smith

Smith said a significant portion of the profitability improvement will come from cost reductions at FedEx Express and FedEx Services. He added that the profit improvement initiatives, along with the combined strength of FedEx Ground and FedEx Freight, would put FedEx on track to achieving its financial goals.
He said FedEx has many cost reduction activities underway and cited improved information technology as one reason FedEx will be able to meet its goal of reducing costs.
“We are revamping the Express cost structure through a combination of cost reductions, efficiency improvements, and service repositioning," Smith said.
“Our overall strategy is closely tied to effective yield management,” Smith said. “The key is striking the right balance between volume growth and yield improvements. With slow economic growth, however, the cost reduction programs we will describe (Wednesday) are also essential to achieve our financial goals." - Chris Dupin